statement of additional information (sai) final … fund/pdf/baroda.pdfthis statement of additional...

Baroda Pioneer Mutual Fund

Statement of AdditionalInformation (SAI)

This Statement of Additional Information (SAI) contains details of Baroda Pioneer Mutual Fund, its constitution, and certain tax,

legal and general information. It is incorporated by reference (is legally a part of the Scheme Information Documents).

The SAI is dated 13 July 2009.

A. CONSTITUTION OF THE MUTUAL FUNDBaroda Pioneer Mutual Fund, formerly known as BOB Mutual Fund (“the Mutual Fund” or “the Fund”) has been constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882) on 30th October 1992. The trust deed has been registered under the Indian Registration Act, 1908. The Mutual Fund is registered with SEBI under Registration No. MF/018/94/2, dated November 24, 1994.

BOB Mutual Fund was established by Bank of Baroda by execution of a Trust Deed dated October 30, 1992. Pioneer Global Asset Management SpA has acquired 51% of the shareholding of BOB Asset Management Company Limited and is the co- sponsor of the BOB Mutual Fund. SEBI has approved the name of the fund to be changed to Baroda Pioneer Mutual Fund vide its letter IMD/RB/134922/08 dated August 12, 2008.

B. SponsorsBaroda Pioneer Mutual Fund (“the Fund”) was set up as a Trust sponsored by Bank of Baroda. The sponsor is the settlor of the Mutual Fund Trust. Following its acquisition of 51% of BOB Asset Management Company, Pioneer Global Asset Management SpA is the co-sponsor of the Baroda Pioneer Mutual Fund.

Pioneer Global Asset Management S.p.AWith 80 years’ experience in fund management, Pioneer Investments (the “Group”) has a history few asset management companies can match. Pioneer

™Investments flagship fund, Pioneer Fund , is the third

oldest mutual fund in the United States. It has not only weathered volatile market conditions, but has outperformed common stocks, long term bonds, US Treasury Bills and inflation since its foundation in 1928.

Innovation is part of Pioneer heritage. At the forefront of the establishment of the modern US mutual fund industry, Pioneer Investments is an industry leader in the development of this market in Europe. The Group was the first asset management company to launch investment funds in Italy, first in Germany to register US mutual funds under the Foreign Investments Act, and first to distribute open-ended investment funds in Poland. In 2002 it acquired the Momentum Group, which in keeping with Pioneer Investments’ tradition of innovation, is one of the founders of the funds of hedge funds industry.

In October 2000, UniCredito Italiano S.p.A. (“UCI”) completed its acquisition of the Pioneer Group, Inc., further bolstering the capabilities of its asset management operations in Milan and Dublin. Through the consolidation of these powerful investment houses, Pioneer Investments is ideally positioned to expand its global reach and penetrate deeper into each market.


Information About The Sponsor, AMC And Trustee Companies

The main activity of Pioneer Investments is the management and distribution of over 180 investment funds and alternative investments. With investment centres in Boston, Dublin, Milan and Singapore it manage assets worth €159 billion as on 31st May 2009. Headquartered in Milan, Pioneer Investments has a presence in over 31 countries around the world.

The investment process is active, bottom-up and research-driven, based upon the principles of fundamental investing that Pioneer Investments has used since 1928. The approach enables Pioneer Investments to make informed judgements about how industries and companies have operated in the past, about their future behaviour and about the effects of these variables on stock prices. We add a strong quantitative discipline to this process, which supports the work of fundamental analysts and keeps a close check on the investment risks for its funds.

* Pioneer Investments is a trading name of the Pioneer Global

Asset Management S.p.A. group of companies (“PGAM”).

PGAM is a wholly owned subsidiary of UniCredit S.p.A.

Pioneer Investments operates in markets through is trademark “Pioneer Investments”

(Rupees in Crore as at end December)

Particulars 2006 2007 2008

Total Income 2166.57 2552.54 2929.36

Profit After Tax 1967.28 2492.54 2423.85

Reserves & Surplus 3395.33 4013.65 5903.07

Net worth 10224.72 10860.63 14208.18

Assets Under Management

(if applicable) N.A N.A N.A.

Bank of BarodaBank of Baroda, a Body Corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and having its Head office at Mandvi, Baroda and Central Office at Baroda Corporate Centre, C-26, G-Block, Bandra-Kurla Complex, Bandra (East) Mumbai - 400 051, is the co- sponsor of Baroda Pioneer Mutual Fund. The Sponsor has contributed a sum of Rs. 10 Lacs towards the establishment of Baroda Pioneer Mutual Fund. The Sponsor is not responsible or liable for any loss resulting from the operation of the Schemes beyond the initial contribution of the said sum of Rupees Ten Lacs made by it towards setting up of Baroda Pioneer Mutual Fund.

To diversify its business activities and to perform specialised functions, the Bank has the following subsidiaries in India:

In the Indian banking universe, Bank of Baroda occupies a distinct position. Bank of Baroda is a state-owned bank with more than 100 years of successful existence.

The biggest strength is its uninterrupted profit performance and consistent record in dividend payments. The name inspires confidence among its customers. The track record in the market, the sound financials, its contribution to social sectors and even to policy-making has given the Bank a unique place in the marketplace.

2

Bank of Baroda’s vast distribution channel of domestic branches (at 2,926 on 31st March, 2009), extension counters and ATMs (at 1,179), and a strong international presence in 25 countries (excluding India) covering regions like U.S.A., U.K., Africa, Middle East and Asia-Pacific zones has ensured a wide global client base of 36.5 million.

During the financial year 2008-09, Bank touched a global business level of 3,36,383 crore reflecting a growth of 30% (Y-o-Y). The level of net profit at Rs 2,227 crore reflected a robust year-on-year growth of 55.2%. On the front of asset quality management, while the gross NPA declined from 2.47% in 2006-07 to 1.27% in 2008-09, the net NPA declined from 0.60% to 0.31%. Bank of Baroda enjoyed the CRAR of 14.05% (as per the Basel II). While the ROAA stood at 1.09%, the ROE stood at 19.56% at end-March 2009.

Name of the Subsidiary Principal Business

BOB Capital Markets Ltd. Merchant Banking & Primary

Dealership in Govt. Securities

BOB Cards Ltd. Credit Card Operations

Nanital Bank Limited Banking

The financial performance of the Sponsor during the last 3 years is as under.

3 Baroda Pioneer Mutual Fund

BOARD OF TRUSTEES

Name

Shri R. L. Baxi

Chairman

Independent Trustee

Age

71

Qualification

B.Com, LLB,

F.C.I.I(London), F.F.I.I.

Brief Experience

Mr. R L Baxi has more than 47 year of experience in insurance, investments,

accounts and administration. He worked as a General Manager in Indian

Mercantile Insurance Co. Ltd, GIC, National Insurance Company and The

New India Assurance Co. Ltd. He also worked as Director & General

Manager of The New India Assurance Co. Ltd. Mr. Baxi is a Director at

various companies.

Shri Shrinivas K

Suvarna

Independent Trustee

66 B. Com, LLB, CAIIB Mr. Shrinivas K Suvarna has over three decades of experience in the

banking, finance, accounts, administration and consulting. He has retired

from Bank of Baroda as a Deputy General Manager.

Shri. V. H. Bhatia

Independent Trustee

70 B. Com, ACA Mr. V H Bhatia has more than 40 year of experience in Banking, Finance,

Accounts and General Administration. He retired from the Bank of Baroda

as a General Manager.

Shri D Sarkar

Associate Trustee

56 M.Com, FCA, CAIIB Mr. D Sarkar represents Bank of Baroda on Board of Trustee. He is General

Manager of Bank of Baroda, having more than 30 year of experience in

Banking, Finance, Accounts and General Administration.

(Rupees in Crore)Particulars 2006-2007 2007-2008 2008-2009Total Income 10385 13864 17754Profit After Tax 1026 1435 2227Reserves & Surplus 8284 9161Net worth ( equity capital plus free reserve) 8436 9526 11386Assets Under Management ( if applicable) N.A N.A N.A.

C. The Trustee: Baroda Pioneer Mutual FundThe Board of Trustees shall discharge its obligation as Trustee of Baroda Pioneer Mutual Fund. The Trustee ensures that the transactions entered into by the AMC are in accordance with the SEBI Regulations and will also review the activities carried on by the AMC.

The registered address of Baroda Pioneer Mutual Fund is 501, Titanium, 5th Floor, Western Express Highway, Goregaon (E), Mumbai - 400063.

Board of TrusteesThe Board of Trustees shall discharge its obligation as Trustee of Baroda Pioneer Mutual Fund.

(ii) Supervisory role of the TrusteesThe Board of Trustees monitors the activities of the AMC. From time to time it seeks information from the AMC in the form of Performance Reports, Compliance Reports, etc. On a quarterly basis, a review report is prepared by the AMC and the same is placed at the board meetings of the Trustee Company. Specific approval of the Trustees is also obtained on various important matters. The Audit Committee, comprising of three trustees on the board of the Trustee and an Independent Director Chairs the Committee, has been constituted pursuant to the SEBI circular MFD/CIR/010/024/ 2000 dated January 17, 2000 to, inter alia, review internal audit systems and reports

from internal and concurrent auditors. During the year 2008-09, seven meeting of Board of Trustees were held.The registered address of Baroda Pioneer Mutual Fund is 501, Titanium, 5th Floor, Western Express Highway, Goregaon (E), Mumbai - 400063.

Rights, Duties and Responsibilities of the Trustees

As per the Trust Deed and the SEBI (Mutual Funds) Regulations, 1996, the Trustees have several rights, duties and responsibilities including the following:

1. To enter into an investment management agreement with the AMC with the prior approval of SEBI.

2. To ensure that the investment management agreement

Baroda Pioneer Mutual Fund 4

contains such clauses as per mentioned in the Fourth Schedule of SEBI Regulation and such other clause as are necessary for the purpose of making investment.

3. The Trustees shall have a right to obtain from the asset management company such information as is considered necessary by the trustees.

4. To ensure before launch of any Schemes that the AMC has: -

i. Systems in place for the back office, dealing room and accounting;

ii. Appointed all key personnel including Fund Manager(s)for the scheme(s) and submitted their bio-data which shall contain the educational qualification, past experience in the securities market with the trustees, within 15 days of their appointment;

iii. Appointed auditors to audit its accounts;

iv. Appointed a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulation, notification, guidelines instruction, etc,. Issued by the Board or the Central Government and for redressal of investor’s grievances;

v. Appointed the registrar and laid down parameters for their supervision.

vi. Prepared a compliance manual and designed internal control mechanisms including internal audit systems;

vii. Specified norms for empanelment of broker and marketing agents.

5. To ensure that the AMC has been diligent in empanelling the brokers, in monitoring securities transaction with the brokers and avoiding undue concentration of business with any broker.

6. To ensure that the AMC has not given any undue and unfair advantage to any associate or dealt with any of the associate of the asset management company in any manner detrimental to the interest of the unit-holders.

7. The Trustees shall ensure that the transactions entered into by the asset management company are in accordance with these regulation and the Schemes.

8. To ensure that the AMC has been managing the mutual fund schemes independently of other activities and have taken adequate steps to ensure that the interests of one scheme are nor being compromised with those of any other schemes or of other activities of the asset management company.

9. To ensure that all the activities of the AMC are in accordance with the provision of SEBI (Mutual Fund) Regulations, 1996.

10. Where the trustees have reason to believe that the conduct of the business of the mutual fund is not in accordance with SEBI Regulations and the scheme they shall forthwith take such remedial steps as are necessary by them and shall immediately inform SEBI of the violation and the action taken by them.

11. To file the details of his/her transaction of dealing in securities with the Fund on a quarterly basis.

12. To be accountable for, and be the custodian of, the funds and the property of the respective scheme and to hold the same in trust or the benefit of the unit holders in accordance with the SEBI regulation and the provision of the trust deed.

13. To take steps to ensure that the transactions of the mutual fund are in accordance with the provisions of the trust deed.

14. To be responsible for the calculation of any income due to be paid to the mutual fund and also of any income received in the mutual fund for the holder of the units of any schemes in accordance with SEBI (Mutual Fund) Regulations and the trust deed.

15. To obtain consent of the unit holders:

i. Whenever required to do so by the board in the interest of the unit holders or;

ii. Whenever required to do so on the requisition made by three fourth of the unit holders of any Schemes;

iii. When the majority of the trustees decide to wind up or prematurely redeem the units;

16. To call for details of transaction in securities by the Key personnel of the AMC in his own name or on behalf of the AMC and shall report to the SEBI, as and when required.

17. To quarterly review all transaction carried out between the mutual fund, Asset Management Company and its associates.

18. To quarterly review the net worth of the AMC and in case of any shortfall, ensure that the AMC make up for the shortfall as per clause (f) of sub-regulation (1) of regulation 21 of SEBI (Mutual Fund) Regulations, 1996.

19. To periodically review all service contracts such as custody arrangements, transfer agency of the securities and satisfy itself that such contracts are executed in the interest of the unit-holders.

20. To ensure that there is no conflict of interest between the manner of deployment of its net worth by AMC and the interest of unit holders.

21. To periodically review the investor complaints received and the redressal of the same by the AMC.

22. To abide by the code of conduct as specified in the fifth schedule of SEBI (Mutual Fund) Regulations, 1996.


23. To furnish to SEBI on a half yearly basis:-

i. a report on the activity of the mutual fund

ii. a certificate stating that the trustees have satisfied themselves that there have been no instance of self dealing or front running by any of the trustees, directors and key personnel of the AMC;

iii. a certificate to the effect that the AMC has been managing the schemes independently of any other activities and in case any activities of the nature referred to in sub- regulation (2) of regulation 24 of SEBI Regulation have been undertaken by the AMC and has taken adequate steps to ensure that that the interest of the unit holders are protected.

24. The independent trustee referred to in regulation 16 shall give their comments on the report received from the AMC regarding the investments made by the schemes in the securities of group companies of the sponsor.

25. The trustees shall ensure that no change in the fundamental attribute of any scheme or the trust or fees and expenses payable or any change which would modify the scheme and affects the interest of unit holders, shall be carried out unless,

i. a written communication about the proposed change is sent to each unit holder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the head office of the mutual fund is situated; and

ii. the unit holders are given an option to exit at the prevailing Net Asset Value without any Exit load in accordance with the terms of this offer document.

Explanation: For the purpose of this clause “fundamental attributes” means the investment objectives and term of the schemes as defined later in the offer Document under the section “Investment objectives and Policies”

26. To maintain arms’ length relationship with other companies, or institution or financial intermediaries or any body corporate with which he may be associated.

27. To ensure that no Trustee shall participate in the meetings of the board of Trustee or Trustee Company when any decisions for investments in which he may be interested are taken.

28. To furnish to the board of Trustee or trustee company particulars of interest which he may have in any other company, or institution or financial intermediary or any corporate by virtue of his position as director, partner or with which he may be associated in any other capacity.

29. To appoint a custodian and shall be responsible for the supervision of its activities in relation to the mutual fund and shall enter into a custodian agreement with the custodian for this purpose.

30. To ensure that the removal of trustees in all case would require the prior approval of SEBI.

31. To ensure that the Trustee may dismiss the AMC under the specific events only with the approval of SEBI and in accordance with the SEBI Regulations.

32. To forbid the acquisition of any asset out of the trust property which involves the assumption of any liability which is unlimited and shall not result in encumbrance of the trust property in any way.

33. To provide or cause to provide information to unitholders and SEBI as may be specified by SEBI.

As per the sub-regulation (25) of the SEBI Regulations, the trustees shall exercise due diligence as under:

A. General Due Diligence

I. The Trustees shall be discerning in the appointment of the directors on the Board of Asset Management Company.

ii. Trustees shall review the desirability of continuance of the asset management company if substantial irregularities are observed in any of the schemes and shall not allow the asset management company to float the new sachems.

iii. The trustees shall ensure that the trust property is properly protected, held and administered by proper persons and by a proper number of such persons.

iv. The trustee shall ensure that all services providers are holding appropriate registration from the board of concerned regulatory authority.

v. The trustees shall arrange for test checks of service contracts.

vi. Trustees shall immediately report to Board of any special development in the mutual fund.

B. Specific Due Diligence

The Trustees shall:

i. Obtain internal audit reports at regular intervals from independent auditors appointed by the Trustees

ii. Obtain compliance certificates at regular intervals from the asset management company.

iii. Hold meeting of trustees at frequent intervals.

iv. Consider the reports of the independent auditors and compliance reports of Asset Management Company at the meetings of trustees for appropriate action.

v. Maintain records of the decision of the trustees at their meetings and of the minutes of the meetings.

vi. Prescribe the adhere to a code of ethics by the trustees, Asset management company and its personnel.

vii. Communicate in writing to the asset management company of the deficiencies and checking on the rectification of deficiencies.

6Baroda Pioneer Mutual Fund

Notwithstanding the aforesaid, the trustee shall not be held liable for acts done in good faith if they have exercised adequate due diligence honestly.

34. The Independent Directors of the trustees or the asset management company shall pay specific attention to the following, as may be applicable, namely:-

I. The Investment Management Agreement and the compensation paid under the agreement;

ii. Service contracts with affiliates-whether the asset management company has charged higher fees than outside contracts for the same services;

iii. Selection of the assets management company’s independent directors;

iv. Securities transaction involving affiliates to the extent such transaction are permitted;

v. Selecting and nominating individuals to fill independent directors vacancies;

vi. Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions;

vii. The reasonableness of fees paid to sponsor, asset management company and any other for service provided;

viii. Principal underwriting contracts and their renewals;

ix. Any service contracts with the associates of the asset management company.

Modification of Trust Deed No amendment on trust deed will be carried out without the prior approval of the SEBI and the unit holders approval would be obtained where it affects the interest of unit holders.

D. Asset Management CompanyBaroda Pioneer Asset Management Company Ltd. (BPAMC) has been acting as the Investment Manager for the Baroda Pioneer Mutual Fund and continues to do so. Further details about Baroda Pioneer Asset Management Company are as follows:

About Baroda Pioneer Asset Management Company Ltd.Baroda Pioneer Asset Management Company Limited, formerly known as as BOB Asset Management Company Ltd, has been incorporated under the provisions of the Companies Act, 1956 on 5th November 1992. The company was a wholly owned subsidiary of Bank of Baroda. On 27th June 2008, Pioneer Global Asset Management SpA, Italy acquired a 51% shareholding of BOB Asset Management Company Limited, Subsequently, the name of the AMC was changed to Baroda Pioneer Asset Management Company Limited and a fresh Certificate of Incorporation issued by the Registrar of Companies on 8th July 2008. As per the SEBI (Mutual Funds) Regulations, 1996, at least 50% of the Board of Directors is Independent members and the remaining are nominated for appointment by the Sponsor of the AMC.

The registered officer of the Baroda Pioneer Asset Management Company Limited is 501, Titanium, 5th Floor, Western Express Highway, Goregaon (E), Mumbai - 400063.

The present shareholding pattern of the Baroda Pioneer AMC is as follows:

Name of Shareholders % Holding

Pioneer Global Asset Management SpA 51%

Bank of Baroda and its Nominee 49%

(i) Details of AMC Directors:

Name

Dr. Anil K.

Khandelwal

Chairman

Associate Director

Age

61

Qualification

B.Sc (Chemical Eng),

MBA, LLB, PHD

Brief Experience

Dr. Anil K Khandelwal, Chairman, Baroda Pioneer Asset Management Co.

Ltd, has a brilliant academic career and over three decades of banking

experience. A chemical engineer with an MBA and a degree in Law, he also

holds a Doctoral Degree in Management. He is also a Fellow of the Indian

Institute OF Banking & Finance.

Dr. Khandelwal was also the Chairman & Managing Director of Bank of

Baroda, from March 2005 to March 2008 before he took over as the

Chairman of Baroda Pioneer AMC. Prior to this, he was the Chairman of

Dena Bank for a year till February 2005.

Mr. Dario Frigerio

Associate Director

46 First Class Honours

from Bocconi

University, Milan

Mr. Dario Frigerio is the Chief Executive Officer of Pioneer Global Asset

Management S.p.A. and the Head of the Wealth Management Division of

UniCredito Italiano. He has served various roles within the Group including

that of Vice Chairman of Pioneer Investments, Boston (2001-04), CEO of

Pioneer Investments, Ireland(2000-01) and CIO of Europlus Research &

Management, Ireland (1998-2000). He is also a director of various

companies of the UniCredit Group.

Name Age Qualification Brief Experience

Mr. M. D. Mallya

Associate Director

57 BE, Post Graduate

Diploma in

Management

Mr. M. D. Mallya, Chairman and Managing Director Bank of Baroda. Prior to

joining the Bank, he was the Chairman & Managing Director of Bank of

Maharashtra. Mr. Mallya has Bachelor of Engineering with Distinction from

Karnataka Regional Engineering College, Suratkal. Subsequently, he

completed post-graduation Diploma in Management from Indian Institute of

Science, Bangalore with Distinction. In a career spanning over 31 years, he

acquired a rich experience in banking at various positions and assignments.

Mr. Angus William

Stening

Associate Director

44 Diploma in Business

Accounting, Sydney

Institute of Technology

Mr. Angus William Stening CEO, Asia & Emerging Markets Division

PIONEER INVESTMENTS. Prior to assuming his current role, Mr. Stening

was Head of Central & Eastern Europe based in Prague where he

successfully managed the expansion and strategic development of Pioneer

Investments’ presence across the region to a market leading position.

Angus joined Pioneer Investments in 1999.

Mr. S. Bhattacharya

Associate Director

59 M.Sc, CAIIB Mr S. Bhattacharya was the Managing Director of Baroda Pioneer Asset

Management Co. Ltd. till July 2008. He is currently posted as General

Manager, Bank of Baroda. Earlier he has served on various positions in

Bank of Baroda. He also a director in Baroda L&G Life Insurance Company

Limited.

Prof B. B.

Bhattacharya

Independent Director

64 M.A.(Economics),

Ph.D (Economics)

Professor B.B. Bhattacharya is currently the Vice-Chancellor of Jawaharlal

Nehru University, New Delhi. Prior to this post Prof. Bhattacharya was

Director (2001-2005) and Professor (1981 onwards) at the Institute of

Economic Growth, Delhi. He passed M.A. in Economics from the University

of Allahabad in 1966 with first position in the order of Merit and obtained

Ph.D. in Economics from Delhi School of Economics, University of Delhi in

1971. He was UNESCO Fellow at Polish Academy of Sciences, Warsaw in

1974 and Ford Foundation post doctoral fellow at the University of

California, Berkeley in 1980-81.

Dr. P. N. Khandwalla


69 B.Com, MBA, MSIA,

PhD, CA

Dr. P. Khandwalla serves as a Consultant to many Indian and international

organisations in the areas of team building, innovative excellence,

management and organisational restructuring and creativity training. Prof.

Khandwalla served as L&T Chair Professor of Organisational Behaviour at

IIMA from 1985 to 1991. He was associated with the Indian Institute of

Management, Ahmedabad as a Professor from 1975 to 2002. He has won

many international and Indian awards. Prof. Khandwalla is an Associate

Member of the Institute of Chartered Accountants of India. He taught at

McGill University, Canada for several years. He has done his MBA from

Wharton, Pennsylvania and Ph.D. from Carnegie-Mellon, USA.

Mr. G. P. Gupta


68 M.Com, Delhi

University

Mr. G.P. Gupta was the Chairman of Industrial Development Bank of India

(IDBI). He has rich experience in banking, Finance and other sectors of the

Indian Economy. Mr. Gupta was also the Chairman of Unit Trust of India

(January 1997 - June 1998) and has served in various roles ending as

Executive Director at Industrial Development Bank of India (1969 - 1996). He

is a Director on various companies and member of various committees.

Mr. Shiv Dayal


45 Masters from London

Business School

Mr. Shiv Dayal is the Founder and Managing Director of Langham Capital

He is also the Chairman of F1F9 (India) Private Ltd. Prior to founding

Langham Capital, Mr. Dayal managed two technology ventures in Europe,

worked in the Mergers & Acquisitions groups at JPMorgan and Dresdner

Kleinwort Benson in London and New York. Mr. Shiv Dayal has a Bachelor

degree in Economics from the University of Sussex, a Masters degree in

Development Economics from the University of East Anglia and an MBA

from London Business School. He is also a Director at various companies.


Name Brief Experience

Mr. Rohit Arora


50 B.Com (Hons),

Chartered

Accountants

Mr. Rohit Arora, Founder & Chairman, EMR Technology Ventures Private

Limited. He has over two decades of experience in business process

outsourcing, investment banking and management consulting. He has

advised Fortune 1000 corporations on their India entry strategy including

identifications, negotiations and selection of joint venture partners.Mr. Arora

is also the founder director of AR Credit. He was earlier the Managing

Director of AIA Capital India Pvt. Ltd, the Investment Banking arm of AIG -

American International Group. Mr. Arora is a fellow member of the Institute

of Chartered Accountants of India.

Age Qualification

(ii) Duties and Obligation of Asset Management

Company

Duties and obligation of the AMC as specified in the

SEBI Mutual Fund Regulations are as under:

1. The asset management company shall take all

reasonable steps and exercise due diligence to ensure

that the investment of funds pertaining to any scheme

is not contrary to the provisions of these regulations

and the trust deed.

2. The asset management company shall exercise due

diligence and care in all its investment decisions as

would be exercised by other persons engaged in the

same business.

3. The asset management company shall be responsible

for the acts of commissions or omissions by its

employees or the persons whose services have been

procured by the asset management company.

4. The asset management company shall submit to the

trustees quarterly reports of each year on its activities

and the compliance with these regulations.

5. The trustees at the request of the asset management

company may terminate the assignment of the asset

management company at any time:

Provided that such termination shall become effective

only after the trustees have accepted the termination of

assignment and communicated their decision in writing

to the asset management company.

6. Notwithstanding anything contained in any contract or

agreement or termination, the asset management

company or its directors or other officers shall not be

absolved of liability to the mutual fund for their acts of

commission or omissions, while holding such position

or office.

7. The Chief Executive Officer (whatever his designation

may be) of the asset management company shall

ensure that the mutual fund complies with all the

provisions of the regulations and the guidelines or

circulars issued in relation thereto from time to time

and that the investments made by the fund managers

are in the interest of the unit holders and shall also be

responsible for the overall risk management function of

the mutual fund.

Explanation: For the purpose of this sub-regulation, the

words ‘these regulations’ shall mean and include the

Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 as amended from time to time.

8. The fund manager (whatever the designation may be)

shall ensure that the funds of the schemes are invested

to achieve the objectives of the scheme and in the

interest of the unit holders.

9. a. An asset management company shall not through

any broker associated with the sponsor, purchase

or sell securities, which is average of 5% or more

of the aggregate purchases and sale of securities

made by the mutual fund in all its schemes.

Provided that for the purpose of this sub-

regulation, aggregate purchase and sale of

securities shall exclude sale and distribution of

units issued by the mutual fund.

Provided further that the aforesaid limit of 5%

shall apply for a block of any three months.

b. An asset management company shall not

purchase or sell securities through any broker

[other than a broker referred to in clause (a) of

sub-regulation (7)] which is average of 5% or more

of the aggregate purchases and sale of securities

made by the mutual fund in all its schemes, unless

the asset management company has recorded in

writing the justification for exceeding the limit of

5% and reports of all such investments are sent to

the trustees on a quarterly basis.

Provided that the aforesaid limit shall apply for a

block of three months.


10. An asset management company shall not utilise the

services of the sponsor or any of its associates,

employees or their relatives, for the purpose of any

securities transaction and distribution and sale of

securities:

Provided that an asset management company may

utilise such services if disclosure to that effect is made

to the unit holders and the brokerage or commission

paid is also disclosed in the half yearly annual accounts

of the mutual fund.

Provided further that the mutual funds shall disclose at

the time of declaring half-yearly and yearly results;

a) Any underwriting obligations undertaken by the

schemes of the mutual funds with respect to issue

of securities associate companies,

b) Devolvement, if any,

c) Subscription by the schemes in the issues lead

managed by associate companies

d) Subscription to any issue of equity or debt on

private placement basis where the sponsor or its

associate companies have acted as arranger or

manager.

11. The asset management company shall file with the

trustees the details of transactions in securities by the

key personnel of the asset management company in

their own name or on behalf of the asset management

company and shall also report to the Board, as and

when required by the Board.

12. In case the asset management company enters into

any securities transactions with any of its associates a

report to that effect shall be sent to the trustees at its

next meeting.

13. In case any company has invested more than 5 per

cent of the net asset value of a scheme, the investment

made by that scheme or by any other scheme of the

same mutual fund in that company or its subsidiaries

shall be brought to the notice of the trustees by the

asset management company and be disclosed in the

half yearly and annual accounts of the respective

schemes with justification for such investment provided

the latter investment has been made within one year of

the date of the former investment calculated on either

side.

14. The asset management company shall file with the

Trustee and the Board -

(a) Detailed bio-data of all its directors along with their

interest in other companies within fifteen days of

their appointment; and

(b) Any change in the interests of directors every six

months.

(c) A quarterly report to the trustees giving details and

adequate justification about the purchase and sale

of the securities of the group companies of the

sponsor or the asset management company as

the case may be, by the mutual fund during the

said quarter.

15. Each director of the Asset Management Company shall

file the details of his transactions of dealing in securities

with the trustees on a quarterly basis in accordance

with the guidelines issued by the Board.

16. The asset management company shall not appoint any

person as key personnel who has been found guilty of

any economic offence or involved in violation of

securities laws.

17. The asset management company shall appoint

registrars and share transfer agents who are registered

with the Board.

Provided if the work relating to the transfer of units is

processed in-house, the charges at competitive market

rates may be debited to the scheme and for rates

higher than the competitive market rates, prior approval

of the trustees shall be obtained and reasons for

charging higher rates shall be disclosed in the annual

accounts.

18. The asset management company shall abide by the

Code of Conduct as specified in the Fifth Schedule.

Further the Asset Management Company shall ensure

the following

a) Not to acquire any of the assets out of the Scheme

property which involves the assumption of any

liability which is unlimited or which may result in

encumbrance of the Scheme property in any way.

b) Not to take up any activity in contravention of the

SEBI Regulations.

c) To ensure that no loss or damage or expenses

incurred by the AMC or officers of AMC or any

person delegated by the AMC, shall be met out of

the trust property.


Key Personnel of Investment Manager

Name of designation

Mr. Rajan Krishnan

Chief Executive

Officer

Age

47

Qualification

BA (H) Economics,

PGDBM from XLRI

Jamshedpur

Brief Experience

Mr. Rajan Krishnan is a B.A (Hons) from Delhi University and a PGDBM from

XLRI, Jamshedpur having over 23 years of experience in marketing, of

which 14 years are in the mutual fund industry. Mr Krishnan is the Chief

Executive Officer of Baroda Pioneer Asset management Co. Ltd. since 8th

July 2008. Prior to his appointment, he was the Business Head (Asset

Management)-Principal Pnb Asset Management Company Pvt Ltd from

June 2003 to March 2008, Vice President ( Sales and Marketing) - Zurich

Asset Management Company Pvt. Ltd. betweenDec 1999 to June 2003 and

Vice President (Sales)-Kothari Pioneer Asset Management Company Limited

from September 1994 to December 1999

Ms. Sweata Shah-

Ostrowska

Chief Operating

Officer

33 LLM, LLB (Hons)

(University of Warwick,

UK)

Ms. Sweata Shah-Ostrowska hasis over eight years of experience in the

asset management industry having worked in Legal, Compliance, Marketing

and Strategic Devlopment. She has been appointed as the Chief Operating

Officer for Baroda Pioneer Asset Management Co. Ltd. and prior to that was

Head of Strategic Development India for Pioneer Investments. Prior to her

assignment in India, she worked in the emerging markets division for the

Pioneer Group in Milan. She has served as Head of Marketing & Business

Development for Old Mutual Kenya and has worked with Credit Suisse

Asset Management (London) in the Legal & Compliance Division.

Abhay Nagar

Vice President &

Head of Sales

36 MBA Finance Mr. Abhay Nagar brings with him over 14 years of rich experience in

financial markets. Prior to joining Baroda Pioneer Mutual Fund, he was the

Vice President and Head-Retail Sales at Tata Mutual Fund. Prior to moving

to Mumbai, as All India Head-Retail, served the organization based out of

New Delhi as Regional Manager-North. Mr. Nagar has a Masters in Business

Administration with specialization in Finance. Krishna Kumar

Kushwaha

Company Secretary,

Risk & Compliance

Officer

33 B.Com, ACS Mr. Krishna Kumar Kushwaha is B.Com, ACS, having post and pre

qualification experience of over 6 year. His assignment includes

compliances with Companies Act, SEBI Act etc. He was previously

associated with various organizations in Delhi and attended matters dealing

with ROC, CLB, SEBI, Stock Exchanges and RBI Compliances.

Dipak Acharya

Fund Manager

(Equity)

42 MCom. AICWA, CAIIB Mr. Dipak Acharya is a M.Com, ICWA and CAIIB having 16 years of

experience in Investment area, of which 5 years are in the mutual fund

industry. He is working with Baroda Pioneer Asset Management Company

Ltd. as Fund Manager- Equity. Prior to this, he has been Fund Manager-

Debt and Fund Manager-Equity with BOB Asset Management Company

Ltd. Prior to that he has worked for 10 years in the Treasury Branch and

Credit Deptt of Bank of Baroda

Alok Sahoo

Head, Fixed Income

33 BE, MBA (Finance,

Xavier Institute of

Management,

Bhubaneswar)

He is a management graduate in Finance from XIM, Bhubaneswar having BE

degree from NIT, Rourkela. He has been working in the investment area in

asset management for 9 years. Prior to Baroda Pioneer Mutual Fund, he has

been fixed income fund manager at UTI Mutual Fund and HSBC Mutual Fund.

He was also the Fund Manager for Employee Provident Fund at HSBC Asset

Management. He has experience in the credit research of companies as well.

Hetal P. Shah

Fund Manager (Debt)

28 B.Com, MBA, and

JAIIB

Ms. Hetal P. Shah is a B.Com, MBA, and JAIIB having 9 year of experience

in Treasury and Fund Management. Before joining Baroda Pioneer Asset

Management Co. Ltd. She was working in the Treasury Department with

Bank of India since May 1999.

Amitabh Ambastha

Investor Relation

Officer

34 PGDM; PGD PM&IR;

NSDL & Commodity

Market Certification

Mr. Amitabh Ambastha is a PGDM; PGD PM&IR; NSDL & Commodity

Market Certification having 10 year of experience in Investor Service

Operations. Before joining Baroda Pioneer Asset Management Co. Ltd. he

worked with the TATA Mutual Fund (July 2005- Aug 2008) and UTI

Technology Services Ltd. ( June 1998 – June 2005).


Procedures followed for Investment decisions

The Board of Directors of Baroda Pioneer Asset

Management Company Ltd has appointed “Investment

Committee” (a Committee having Board representation) to

review the Investment activities of the Company. First time

investment decisions in respect of equities/equities related

instruments of a company will be taken by the Investment

Committee (IC). The Investment Committee may invest in the

equity shares of the company, which is on the Specified/A

Group of BSE/ NIFTY/ NIFTY JUNIOR on the date of

investments either from primary or from secondary market

subject to such investments in one company not exceeding

5% of total assets of the each scheme.

The process of approval and execution of individual

transactions is done by the investment team comprising of

Head of Fixed Income, Fund Manager-Equity and Fund

Manager-Fixed Income. The investment decisions are taken

considering the factors like economic scenario, fundamental

analysis, technical analysis, interest rate movements,

liquidity, industry weight age, etc. All the investment

decisions are recorded on a daily basis.

The performance of each Scheme is monitored by the

board of AMC and trustees on periodic basis vis-à-vis

BSE Sensex as a benchmark for investment in equity &

equity related instruments and I-Sec Mi-Bex, Crisil

Composite Bond Fund Index, Crisil Liquid Fund Index and

Crisil Balanced Fund Index, as benchmark indices for debt

funds.

Industry-wise exposure of the scheme shall be reported to

the Investment Committee on regular basis.

Investors Services Please Contact:


501, Titanium, 5th Floor,

Western Express Highway,

Goregaon (E), Mumbai.

Ph No. +91 22 37041000

Fax No. +91 22 30741001

E-mail: [email protected]

E. Service Providers

Custodian

CITI BANK N.A. (SEBI Registration Number:IN/CUS/004)

situated at 77 Ramnord House, Dr. Annie Besant Road,

Mumbai-400018 are the custodian for all the Schemes of

Baroda Pioneer Mutual Fund and they have also been

appointed as Custodian for the proposed Scheme. The

important duties and obligations of the Custodians in

terms of Custodial Agreement entered with them are as

under:

a) All securities/investments of the Schemes shall be in

the custody of the Custodian.

b) The Custodian will deliver/receive securities directly to

and from the parties and shall receive or make payment

on receipt of written instructions from Baroda Pioneer

Mutual Fund or any other person authorised by Baroda

Pioneer Mutual Fund.

c) The Custodian will be responsible for loss or damage

to the securities due to its negligence or negligence of

its employees and approved agents.

d) The Custodian will ensure smooth inflow/outflow

of securities and such other instruments as and

when necessary in the best interest of the investors.

e) The Custodian will ensure that the benefits due to the

holdings are recovered.

f) The Custodian is entitled to remuneration for its

services in accordance with the terms of the existing

Custodial Agreement which interalia provides that the

custodian will charge the Schemes a fee at the

following rates apart from reimbursement of out of

pocket expenses:

Registrar and Transfer Agents

Karvy Computershare (Pvt.) Ltd. having its registered office

at Karvy House, 21, Avenue 4, Street No. 1, Banjara Hills,

Hyderabad - 500 034 are the Registrars and Transfer Agents

for the Schemes.

Board of Trustees of Baroda Pioneer Mutual Fund and

Baroda Pioneer Asset Management Co. Ltd. have ensured

that the Registrars are registered with SEBI having valid

certificate and also adequate facilities to discharge the

responsibilities with regard to processing of applications,

dispatch of Account Statement/Unit certificates to

Unitholders within the time limit prescribed by SEBI (Mutual

Funds) Regulations, 1996 and also have sufficient capacity

to handle investors' complaints. It has also been ensured

that Karvy Computershare (Pvt) Ltd. has adequate facilities,

processes, etc. to address risk management issues

prescribed by SEBI. The Registration Number of Karvy

Computershare (Pvt.) Ltd is INR000000221.

Legal Counsel

Based on the issue on hand, the AMC appoints appropriate

legal counsel on a case to case basis.

Fund Accountant

CITIBANK N.A. situated at 1st Floor, Ramnord House,


Dr. Annie Besant Road, Worli, Mumbai-400018 are the

appointed as the fund accountant for all the Schemes of

Baroda Pioneer Mutual Fund and they have also been

appointed as fund accountant for the proposed Scheme.

Statutory Auditors

Auditors of the Baroda Pioneer Mutual Fund

M/s. Borkar & Muzumdar, Chartered Accountants, having

their office at 235-37, Piramal Mansion, D. N. Road,

Mumbai - 400 001, were appointed as Statutory Auditors of

Baroda Pioneer Mutual Fund for FY 2008-09. The Auditors of

the Schemes are different from those of Baroda Pioneer

AMC.

Auditor of the Baroda Pioneer Asset Management

Company Limited

M/s BSR & Co Chartered Accountants, having their office

at KPMG House, Kamla Mills Compound, 448, Senapati

Bapat Marg, Lower Paral, Mumbai - 400013 were appointed

as statutory auditors of BPAMC for FY 2008-09 . The

auditors of BPAMC are different from the auditors of the

Schemes.

Collecting Bankers

For Collecting Bankers to NFOs please refer Scheme

Information Document of the respective scheme.

F. CONDENSED FINANCIAL INFORMATION

In the last three years Baroda Pioneer Mutual Fund has

launched one scheme i.e Baroda Pioneer Global Fund

(earlier known as Baroda Global Fund). The Condensed

Financial Information of the scheme is as follows:

Baroda Pioneer Global Fund

Date of allotment 06.02.2006

Historical Per Unit Statistics 2006-07 2007-08 2008-09

NAV at the beginning of the

year (Rs.) (Dividend Plan) 9.9657 10.13 10.56

(Growth Plan) 9.9658 9.99 10.58

Dividends -- NIL Nil

Transfer to reserves (if any) -- NIL Nil

NAV at the end of the

year (Rs.) (Dividend Plan) 10.11 12.77 8.05

(Growth Plan) 10.13 12.81 8.07

Annualised return (%)

(Compounded) (Dividend Plan)

(Growth Plan) 1.47 28.22% -37.01%

Net Assets at the end of

period (Rs. Crore) 8.59 3.25 1.67

Ratio of recurring expenses

to net assets 1.82% 1.92% 2.18%

II. HOW TO APPLY

1) Applications complete in all respects together with

necessary remittance may be submitted at any Investor

Service Centers/Investor Service Desks or such

collecting centers as may be designated by the AMC.

The application amount in cheque or Demand Draft

shall be payable to _______ (Please see the Key

Information Memorandum & Application Form of the

respective Scheme). The Cheques / Demand Drafts

should be payable at the Centre where the application

is lodged. No outstation cheques or stock invests or

cash will be accepted.

2) Pursuant to AMFI Best Practice Guideline Circular No.

13/2007-08 dated October 3, 2007, Demand Draft

charges if reimbursed to the unit holders are to be

borne by the AMC and not to be charged to the

scheme. Investors may please further note that in case

of any application made through the Demand Draft, no

Demand Draft charges will be reimbursed by the AMC

in any case. The same will have to be borne by

investors only.

3) Investors are advised to fill up the details of their bank

account numbers on the application form in the space

provided. In order to protect the interest of the Unit

holders from fraudulent encashment of cheques, SEBI

has made it mandatory for investors in mutual funds to

state their bank account numbers in their applications.

SEBI has also made it mandatory for investors to

mention their Permanent Account Number (PAN)

transacting in the units of Baroda Pioneer Mutual Fund,

irrespective of the amount of transaction. Submission

of copy of PAN card is mandatory for all categories of

investors (including NRIs, Guardian of a minor) for

transacting in units of Baroda Pioneer Mutual Fund.

Submission of copy of PAN card by Guardian of a

minor is mandatory for investments by minor whether

copy of PAN of minor is provided or not. The

verification of PAN would be carried out with the

Income tax database. In case of failure, communication

would be sent to the customers to provide the correct

PAN details or communication from Income Tax

authorities evidencing the validity of PAN. Such folios

would be blocked for additional purchases and future

SIP registrations till receipt of the above documents

and verification with original. In case of web-based

transactions, investors would be allowed to transact

subject to PAN validation.

4) Investors are advised to retain the acknowledgement

slip signed/ stamped by the collection centre where

they submit the application.


5) Who can invest

Investors are advised to satisfy themselves that they

are not prohibited by any law governing such entity and

any Indian law from investing in the Scheme and are

authorized to purchase units of mutual funds as per

their respective constitutions, charter documents,

corporate/ other authorizations and relevant statutory

provisions. The following is an indicative list of persons

who are generally eligible and may apply for

subscription to the units of the scheme:

• Indian resident adult individuals, either singly or

jointly (not exceeding three);

• Minor through parent/ lawful guardian; (please see

the note below)

• Companies, bodies corporate, public sector

undertakings, association of persons or bodies of

individuals and societies registered under the

Societies Registration Act, 1860;

• Religious and Charitable Trusts, Wakfs or

endowments of private trusts (subject to receipt of

necessary approvals as required) and Private

Trusts authorised to invest in mutual fund

schemes under their trust deeds;

• Partnership Firms constituted under the

Partnership Act, 1932;

• A Hindu Undivided Family (HUF) through its Karta;

• Banks (including Co-operative Banks and Regional

Rural Banks) and Financial Institutions;

• Non-Resident Indians (NRIs)/ Persons of Indian

Origin (PIO) on full repatriation basis or on non

repatriation basis;

• Foreign Institutional Investors (FIIs) registered with

SEBI on full repatriation basis;

• Army, Air Force, Navy and other para-military

funds and eligible institutions;

• Scientific and Industrial Research Organisations;

• Provident/ Pension/ Gratuity and such other Funds

as and when permitted to invest;

• International Multilateral Agencies approved by the

Government of India/ RBI; and

• The Trustee, AMC or Sponsor or their associates

(if eligible and permitted under prevailing laws).

• A Mutual Fund through its schemes, including

Fund of Funds schemes.

Note: Minor can invest in any scheme of Baroda Pioneer

Mutual Fund through his/her guardian only. Minor Unit

Holder on becoming major may inform the Registrar about

attaining majority and provide his specimen signature duly

authenticated by his banker as well as his details of bank

account and PAN (if required) to enable the Registrar to

update their records and allow him to operate the Account in

his own right.

Notes:

a. Non Resident Indians and Persons of Indian Origin

residing abroad (NRIs)/ Foreign Institutional Investors

(FIIs) have been granted a general permission by

Reserve Bank of India [Schedule 5 of the Foreign

Exchange Management (Transfer or Issue of Security

by a Person Resident Outside India) Regulations, 2000

for investing in/ redeeming units of the mutual funds

subject to conditions set out in the aforesaid

regulations.

b. In case of application under a Power of Attorney or by a

limited company or a corporate body or an eligible

institution or a registered society or a trust fund, the

original Power of Attorney or a certified true copy duly

notarised or the relevant resolution or authority to make

the application as the case may be, or duly notarised

copy thereof, alongwith a certified copy of the

Memorandum and Articles of Association and/or bye-

laws and/ or trust deed and/ or partnership deed and

Certificate of Registration should be submitted. The

officials should sign the application under their official

designation. A list of specimen signatures of the

authorised officials, duly certified/ attested should also

be attached to the Application Form. In case of a Trust/

Fund it shall submit a resolution from the Trustee(s)

authorizing such purchases and redemptions.

Applications not complying with the above are liable

to be rejected.

c. Returned cheques are liable not to be presented again

for collection, and the accompanying application forms

are liable to be rejected. In case the returned cheques

are presented again, the necessary charges are liable

to be debited to the investor.

d Any request for withdrawal of application made during

the New Fund Offer Period will be treated as

Redemption request and shall be processed at the

Redemption Price based on the first NAV declared by

the Scheme after the close of New Fund Offer.

6) Who cannot invest:

It should be noted that the following entities cannot

invest in the scheme(s):

a. Any individual who is a Foreign National

b. Overseas Corporate Bodies (OCBs) shall not be

allowed to invest in the Scheme. These would be firms


and societies which are held directly or indirectly but

ultimately to the extent of at least 60% by NRIs and

trusts in which at least 60% of the beneficial interest is

similarly held irrevocably by such persons (OCBs).

The AMC reserves the right to include/ exclude new/

existing categories of investors to invest in the Scheme

from time to time, subject to SEBI Regulations and

other prevailing statutory regulations, if any.

Subject to the Regulations, any application for Units

may be accepted or rejected in the sole and absolute

discretion of the AMC. For example, the AMC may

reject any application for the Purchase of Units if the

application is invalid or incomplete or if, in its opinion,

increasing the size of any or all of the Scheme’s Unit

capital is not in the general interest of the Unit holders,

or if the Trustee for any other reason does not believe

that it would be in the best interest of the Scheme or its

Unit holders to accept such an application.

The AMC may need to obtain from the investor

verification of identity or such other details relating to a

subscription for Units as may be required under any

applicable law, which may result in delay in processing

the application.

7) Joint Applicants:

In the event an account has more than one registered

owner, the first-named holder shall receive the Account

Statements, all notices and correspondence with

respect to the Account, as well as the proceeds of any

redemption requests or dividends or other distributions.

In addition, such Unit holders shall have the voting

rights, as permitted, associated with such units, as per

the applicable guidelines. Applicants can specify the

‘mode of holding’ in the application form as ‘Joint’ or

‘Any one or Survivor’. In the case of holding specified

as ‘Joint’, Redemptions would have to be signed by all

joint holders in the same order as registered with the

Mutual Fund. However, in cases of holding specified as

‘Anyone or Survivor’, any one of the Unit holders will

have the power to make Redemption requests, without

it being necessary for all the Unit holders to sign.

However, in all cases, the proceeds of the Redemption

will be paid only to the first-named holder.

8) Defective applications liable for rejection:

Applications not complete in any respect are liable to

be rejected. In the event of non-allotment of Units, no

interest will be paid on the money refunded. In case of

any representation to the AMC against the

disqualification of any application, the decision of the

AMC will be final.

9) Investors are requested to provide these details in the

space provided in the application form. This measure is

intended to avoid fraud/ misuse or theft while investing

in units of Baroda Pioneer Mutual Fund. Kindly note

that the applications received which are incomplete or

insufficient information is provided by the investors, are

liable to be rejected. In the event of non-allotment of

units, no interest will be paid on the money refunded.

III. RIGHTS OF UNITHOLDERS OF THE SCHEME

1. Unit holders of the Scheme have a proportionate right

in the beneficial ownership of the assets of the Scheme.

2. When the Mutual Fund declares a dividend under the

Scheme, the dividend warrants shall be dispatched

within 30 days of the declaration of the dividend.

Account Statement reflecting the new or additional

subscription as well as Redemption/ Switch of Units

shall be dispatched to the Unit holder within 10

business days of the Specified Redemption Date.

Provided if a Unit holder so desires the Mutual Fund

shall issue a Unit certificate (non- transferable) within 30

days of the receipt of request for the certificate.

3. The Mutual Fund shall dispatch redemption proceeds

within 10 business days of receiving the redemption

request. In case the AMC fails to dispatch redemption

proceeds within the stipulated time, interest at the rate

of 15% p.a. will be paid to such investors.

4. The Trustee is bound to make such disclosures to the

Unit holders as are essential in order to keep the

unitholders informed about any information known to

the Trustee which may have a material adverse bearing

on their investments.

5. The appointment of the AMC for the Mutual Fund can

be terminated by majority of the Directors of the

Trustee Board or by 75% of the Unit holders of the

Scheme.

6. 75% of the Unit holders of a Scheme can pass a

resolution to wind- up a Scheme.

7. The Trustee shall obtain the consent of the Unit holders:

a. Whenever required to do so by SEBI, in the

interest of the Unit holders.

b. Whenever required to do so if a requisition is made

by three-fourths of the Unit holders of the

Scheme.

c. When the Trustee decides to wind up the Scheme

or prematurely redeem the Units.

d. The Trustee shall ensure that no change in the

fundamental attributes of any Scheme or the trust

or fees and expenses payable or any other change


which would modify the Scheme and affects the

interest of Unit holders, shall be carried out unless:

(i) A written communication about the proposed

change is sent to each Unit holder and an

advertisement is to be given in one English daily

newspaper having nationwide circulation as well

as in a newspaper published in the language of

the region where the Head Office of the Mutual

Fund is situated; and

(ii) The Unit holders are given an option to exit at the

prevailing Net Asset Value without any Exit Load.

8. In specific circumstances, where the approval of

unitholders is sought on any matter, the same shall be

obtained by way of a postal ballot or such other means

as may be approved by SEBI.

9. Suspension or restriction of repurchase/ redemption

facility under any scheme of the mutual fund shall be

made applicable only after the approval from the Board

of Directors of the Asset Management Company and

the Trustee. The approval from the AMC Board and the

Trustees giving details of circumstances and

justification for the proposed action shall also be

informed to SEBI in advance.

10. The following would be the procedure for seeking

approval of the Unit holders in specified circumstances.

(i) The Mutual Fund shall first determine a cut off

date for ascertaining the names of the Unit holders

whose consent is to be sought. This may

necessitate the closing of books and register of

Unit holders, if any, and suspension of approval of

the sale and purchase of Units for a short period

prior to the cut off date.

(ii) The Trustees of the Mutual Fund shall pass a

resolution for convening a meeting of the general

body of the Unit holders and give a notice atleast

21 days before the meeting too all Unit holders

specifying the date, time, venue and purpose of

holding the meeting and publish the public notice

in at least two leading newspapers circulated in

Mumbai including one English and one Marathi

newspaper.

(iii) At the meeting so convened, 5 Unit holders

personally present shall constitute the quorum for

the meeting and the Unit holders personally

present at the meeting shall elect one of

themselves to be the Chairman thereof by a show

of hands. The Chairman of the meeting shall have

the power to regulate the procedure at the

meetings.

(iv) At the meeting, the amendment proposed shall be

put to vote and shall be decided in the first

instance by a show of hands, unless a poll is

demanded. A poll demanded shall be taken at

such time not being later than 48 hours from the

time when the demand was made, as the

Chairman may direct. The result of the poll would

determine whether the amendment proposed will

be passed or not.

(v) Before or on the declaration of the result of voting

on a proposed amendment by a show of hands, a

poll may be ordered to be taken by the Chairman,

of his own motion and shall be ordered to be

taken by him on a demand made in that behalf by

any Unit Holder or Unit holders, holding units

having a issue price of not less than Rs. 50,000/-.

IV. NET ASSET VALUE (NAV) AND VALUATION OF

ASSETS OF THE SCHEMES

Valuation of assets

Valuation of Assets, computation of NAV, Repurchase

Price and their frequency of disclosure will be in

accordance with the provisions of SEBI Regulations

/Guidelines/Directives issued by SEBI from time to

time. The assets of the Scheme will be valued based on

the following valuation norms.

1. Traded Securities

a) Traded securities shall be valued at the last quoted

closing prices on the stock exchange.

b) When the securities are traded on more than one

recognised stock exchange, the securities shall be

valued at the last quoted closing price on the stock

exchange where the security is principally traded. The

AMC will select the appropriate stock exchange and

will record the reason for such selection. All scrips may

be valued at the prices quoted on the stock exchange

where a majority in value of investments are principally

traded.

c) Once a stock exchange has been selected for valuation

of a particular security, reasons for change of the

exchange shall be recorded in writing by the Asset

Management Company.

d) When a security is not traded on selected stock

exchange on a particular valuation day, the value at which

it was traded on another stock exchange may be used.

e) When a security is not traded on any stock exchange

on a particular valuation day, the value at which it was

traded on any stock exchange on the earliest previous


day may be used provided such date is not more than

thirty days prior to the valuation date.

f) When a debt security (other than Government

Securities) is not traded on any stock exchange on any

particular valuation day, the value at which it was

traded on the principal stock exchange or any other

stock exchange, as the case may be, on the earliest

previous day may be used provided such date is not

more than fifteen days prior to valuation date.

g) When a debt security (other than Government Securities)

is purchased by way of private placement, the value at

which it was bought may be used for a period of fifteen

days beginning from the date of purchase

B. Thinly Traded Securities

a. Thinly Traded Equity/ Equity Related Securities:

When trading in an equity/ equity related security (such

as convertible debentures, equity warrants, etc.) in a

month is less than Rs. 5 lacs and the total volume is

less than 50,000 shares, it shall be considered as a

thinly traded security and valued accordingly.

For example, if the volume of trade is 100,000 and

value is Rs. 400,000, the share does not qualify as

thinly traded. Also if the volume traded is 40,000, but

the value of trades is Rs. 600,000, the share does not

qualify as thinly traded.

Where a stock exchange identifies the "thinly traded"

securities by applying the above parameters for the

preceding calendar month and publishes/provides the

required information along with the daily quotations,

the same can be used by the mutual funds.

If the share is not listed on the stock exchanges which

provide such information, then it will be obligatory on

the part of the mutual fund to make its own analysis in

line with the above criteria to check whether such

securities are thinly traded which would then be valued

accordingly.

In case trading in an equity security is suspended upto

30 days, then the last traded price would be

considered for valuation of that security. If an equity

security is suspended for more than 30 days, then the

Asset Management Company/ Trustees will decide the

valuation norms to be followed and such norms would

be documented and recorded

Further it is clarified that in order to determine whether

a security is thinly traded or not, the volumes traded in

all recognized stock exchanges in India may be taken

into account.

b. Thinly Traded Debt Securities:

A debt security (other than Government Securities) shall

be considered as a thinly traded security if on the

valuation date, there are no individual trades in that

security in marketable lots (currently Rs 5 Crore) on the

principal stock exchange or any other stock exchange.

A thinly traded debt security as defined above would be

valued as per the norms set for non-traded debt

security.

In order to determine whether a security is thinly traded

or not the volumes traded in all recognized stock

exchanges in India may be taken into account.

C. Non Traded Securities:

When a security is not traded on any stock exchange

for a period of thirty days prior to the valuation date, the

scrip must be treated as`non-traded' scrip.

D. Valuation of Non-Traded/ Thinly Traded Securities

Non-traded/ thinly traded securities shall be valued “in

good faith” by the asset management company on the

basis of the valuation principles laid down below:

I. Non-traded/ thinly traded equity securities:

a. Based on the latest available Balance Sheet, net worth

shall be calculated as follows: Net Worth per share =

[share capital + reserves (excluding revaluation

reserves) - Misc. expenditure and Debit Balance in P&L

A/c] Divided by No. of Paid up Shares.

b. Average capitalisation rate (P/E ratio) for the industry

based upon either BSE or NSE data (which should be

followed consistently and changes, if any noted with

proper justification thereof) shall be taken and

discounted by 75% i.e. only 25% of the Industry

average P/E shall be taken as capitalisation rate (P/E

ratio). Earnings per share of the latest audited annual

accounts will be considered for this purpose.

c. The value as per the net worth value per share and the

capital earning value calculated as above shall be

averaged and further discounted by 10% for ill-liquidity

so as to arrive at the fair value per share.

d. In case the EPS is negative, EPS value for that year

shall be taken as zero for arriving at capitalised earning.

e. In case where the latest balance sheet of the company

is not available within nine months from the close of the

year, unless the accounting year is changed, the shares

of such companies shall be valued at zero.

f. In case an individual security accounts for more than 5%

of the total assets of the scheme, an independent valuer


shall be appointed for the valuation of the said security.

To determine if a security accounts for more than 5%

of the total assets of the scheme, it should be valued

by the procedure above and the proportion which it

bears to the total net assets of the scheme to which it

belongs would be compared on the date of valuation".

ii. (a) Non Traded /Thinly Traded Debt Securities of

Upto 182 Days to Maturity:

As the money market securities are valued on the

basis of amortization (cost plus accrued interest till

the beginning of the day plus the difference

between the redemption value and the cost

spread uniformly over the remaining maturity

period of the instruments) a similar process should

be adopted for non-traded debt securities with

residual maturity of upto 182 days, in the absence

of any other standard benchmarks in the market.

Debt securities purchased with residual maturity of

upto 182 days are to be valued at cost (including

accrued interest till the beginning of the day) plus

the difference between the redemption value

(inclusive of interest) and cost spread uniformly

over the remaining maturity period of the

instrument. In case of a debt security with maturity

greater than 182 days at the time of purchase, the

last valuation price plus accrued interest should

be used instead of purchase cost. All other non

traded Non Government debt instruments shall be

valued using the method suggested in (i) (b) hereof

ii. (b) Non Traded/ Thinly Traded Debt Securities of Over

182 Days to Maturity.

For the purpose of valuation, all Non Traded Debt

Securities would be classified into “Investment

grade” and “Non Investment grade” securities

based on their credit ratings. The non-investment

grade securities would further be classified as

“Performing” and “Non Performing” assets.

All Non Government investment grade debt

securities, classified as not traded, shall be valued

on yield to maturity basis as described below.

• All Non Government non investment grade

performing debt securities would be valued at a

discount of 25% to the face value.

• All Non Government non investment grade non

performing debt securities would be valued based

on the provisioning norms.

• The approach in valuation of non traded debt

securities is based on the concept of using

spreads over the benchmark rate to arrive at the

yields for pricing the non traded security.

• The Yields for pricing the non traded debt security

would be arrived at using the process as defined

below.

Step A

A Risk Free Benchmark Yield is built using the

government securities (GOI Sec) as the base. GOI Secs

are used as the benchmarks as they are traded

regularly; free of credit risk; and traded across different

maturity spectrums every week.

Step B

A Matrix of spreads (based on the credit risk) are built

for marking up the benchmark yields. The matrix is built

based on traded corporate paper on the wholesale

debt segment of an appropriate stock exchange and

the primary market issuances. The matrix is restricted

only to investment grade corporate paper.

Step C

The yields as calculated above are Marked-up/ Marked

down for ill-liquidity risk.

Step D

The Yields so arrived are used to price the portfolio.

E. Illiquid Securities:

a. Aggregate value of "illiquid securities" of scheme,

which are defined as non-traded, thinly traded and

unlisted equity shares, shall not exceed 15% of the

total assets of the scheme and any illiquid securities

held above 15% of the total assets shall be assigned

zero value.

Provided that in case any scheme has illiquid securities

in excess of 15% of total assets as on September 30,

2000 then such a scheme shall within a period of two

years bring down the ratio of illiquid securities within

the prescribed limit of 15% in the following time frame:

I. All the illiquid securities above 20% of total assets

of the scheme shall be assigned zero value on

September 30, 2001.

ii. All the illiquid securities above 15% of total assets

of the scheme shall be assigned zero value on

September 30, 2002.

b. All funds shall disclose as on March 31 and September

30 the scheme-wise total illiquid securities in value and

percentage of the net assets while making disclosures

of half yearly portfolios to the unitholders. In the list of

investments, an asterisk mark shall also be given


against all such investments which are recognised as

illiquid securities.

c. Mutual Funds shall not be allowed to transfer illiquid

securities among their schemes w.e.f. October 1, 2000.

d. In respect of closed ended funds, for the purposes of

valuation of illiquid securities, the limits of 15% and

20% applicable to open-ended funds should be

increased to 20% and 25% respectively.

e. Where a scheme has illiquid securities as at September

30, 2001 not exceeding 15% in the case of an open-

ended fund and 20% in the case of closed fund, the

concessions of giving time period for reducing the

illiquid security to the prescribed limits would not be

applicable and at all time the excess over 15% or 20%

shall be assigned nil value.

F. Derivative Products

The traded derivatives shall be valued at market price

in conformity with the stipulations of sub clauses (i) to

(v) of clause 1 of the Eighth Schedule to the

Regulations.

The valuation of untraded derivatives shall be done in

accordance with the valuation method for untraded

investments prescribed in sub clauses (i) and (ii) of

clause 2 of the Eighth Schedule to the Regulations

G. Valuation of Government Securities

As per Clause 2(CC) of Eighth Schedule of SEBI

(Mutual Funds) Regulations, 1996, government

securities will be valued at yield to maturity based on

the prevailing market rate. Further, in accordance with

SEBI Circular MFD/CIR NO./14/442/2002 dated

February 20, 2002, for valuation of government

securities, Mutual fund shall use the prices for

Government Securities released by an agency

suggested by AMFI for the sake of uniformity in

calculation of NAVs.

H. Valuation of Unlisted Securities

Unlisted equity shares of a company shall be valued "in

good faith" on the basis of the valuation principles laid

down below:

a. Based on the latest available audited balance sheet, net

worth shall be calculated as lower of (i) and (ii) below:

I. Net worth per share = [share capital plus free

reserves (excluding revaluation reserves) minus

Miscellaneous expenditure not written off or

deferred revenue expenditure, intangible assets

and accumulated losses] divided by Number of

Paid up Shares.

ii. After taking into account the outstanding warrants

and options, Net worth per share shall again be

calculated and shall be = [share capital plus

consideration on exercise of Option/Warrants

received/receivable by the Company plus free

reserves(excluding revaluation reserves) minus

Miscellaneous expenditure not written off or

deferred revenue expenditure, intangible assets

and accumulated losses] divided by {Number of

Paid up Shares plus Number of Shares that would

be obtained on conversion/exercise of

Outstanding Warrants and Options}

The lower of (i) and (ii) above shall be used for

calculation of net worth per share and for further

calculation in (c) below.

(b) Average capitalisation rate (P/E ratio) for the industry

based upon either BSE or NSE data (which should be

followed consistently and changes, if any, noted with

proper justification thereof) shall be taken and

discounted by 75% i.e. only 25% of the Industry

average P/E shall be taken as capitalisation rate (P/E

ratio). Earnings per share of the latest audited annual

accounts will be considered for this purpose.

(c) The value as per the net worth value per share and the

capital earning value calculated as above shall be

averaged and further discounted by 15% for illiquidity

so as to arrive at the fair value per share.

The above methodology for valuation shall be subject

to the following conditions:

i. All calculations as aforesaid shall be based on

audited accounts.

ii. In case where the latest balance sheet of the

company is not available within nine months from

the close of the year, unless the accounting year is

changed, the shares of such companies shall be

valued at zero.

iii. If the net worth of the company is negative, the

share would be marked down to zero.

iv. In case the EPS is negative, EPS value for that

year shall be taken as zero for arriving at

capitalised earning.

v. In case an individual security accounts for more

than 5% of the total assets of the scheme, an

independent valuer shall be appointed for the

valuation of the said security. To determine if a

security accounts for more than 5% of the total

assets of the scheme, it should be valued in

accordance with the procedure as mentioned

above on the date of valuation.


At the discretion of the AMC and with the approval

of the trustees, an unlisted equity share may be

valued at a price lower than the value derived

using the aforesaid methodology.

I. Valuation of Rights entitlement

Until they are traded, the value of the "rights" shares

should be calculated as:

Vr =n x (Pex – Pof) m

Where Vr = Value of rights

n = no. of rights offered

m = no. of original shares held

Pex = Ex-rights price

Pof = Rights Offer Price

Where the rights are not treated pari-passu with the

existing shares, suitable adjustment should be made to

the value of rights. Where it is decided not to subscribe

for the rights but to renounce them and renunciations

are being traded, the rights can be valued at the

renunciation value.

J. Valuation of securities with Put/Call Options

The option embedded securities would be valued as

follows:

Securities with call option:

The securities with call option shall be valued at the

lower of the value as obtained by valuing the security to

final maturity and valuing the security to call option.

In case there are multiple call options, the lowest value

obtained by valuing to the various call dates and

valuing to the maturity date is to be taken as the value

of the instrument.

Securities with Put option

The securities with put option shall be valued at the

higher of the value as obtained by valuing the security

to final maturity and valuing the security to put option.

In case there are multiple put options, the highest value

obtained by valuing to the various put dates and

valuing to the maturity date is to be taken as the value

of the instruments.

Securities with both Put and Call option on the same day

The securities with both Put and Call option on the

same day would be deemed to mature on the Put/Call

day and would be valued accordingly.

K. Valuation Non Performing Assets (NPA)

An ‘asset’ shall be classified as non performing, if the

interest and/or principal amount have not been

received or remained outstanding for one quarter from

the day such income / instalment has fallen due.

The valuation of Non Performing Assets (NPA) would be

in accordance with SEBI Circular MFD/CIR/8/92/2000

dated September18, 2000.

L. Expenses and Incomes Accrued

All expenses and incomes accrued upto the valuation

date shall be considered for computation of net asset

value. For this purpose, while major expenses like

management fees and other periodic expenses should

be accrued on a day to day basis, other minor

expenses and income need not be so accrued,

provided the non-accrual does not affect the NAV

calculations by more than 1%.

M. Changes in securities and in number of units:

Any changes in securities and in the number of units be

recorded in the books not later than the first valuation

date following the date of transaction. If this is not

possible given the frequency of the Net Asset Value

disclosure, the recording may be delayed upto a period

of seven days following the date of the transaction,

provided that as a result of the non-recording, the Net

Asset Value calculations shall not be affected by more

than 1% The valuation guidelines as outlined above are

as per prevailing Regulations and are subject to change

from time to time in conformity with changes made by

SEBI.

Further, In Line with eighth Schedule of SEBI (Mutual

Funds) Regulations, 1996, the Asset Management

Company shall follow the following principles:

Non-traded securities shall be valued "in-good faith" by

the asset management company on the basis of

appropriate valuation methods based on the principles

approved by the Board of the asset management

company. Such decision of the Board must be

documented in the Board minute and the supporting

data in respect of each security so valued must be

preserved. The methods used to arrive at values "in-

good faith" shall be periodically reviewed by the

trustees and reported upon by the auditors as "fair and

reasonable" in their report on the annual accounts of

the fund. For the purpose of valuation of non-traded

securities, the following principles should be adopted:-

(a) equity instruments shall generally be valued on the

basis of capitalization of earnings solely or in

combination with the net asset value, using for the

purposes of capitalization, the price or earning ratios of

comparable traded securities and with an appropriate

discount for lower liquidity;


(b) debt instruments shall generally be valued on a yield to

maturity basis, the capitalization factor being

determined for comparable traded securities and with

an appropriate discount for lower liquidity;

(c) while investments in call money, bills purchased under

rediscounting scheme and short term deposits with

banks shall be valued at cost plus accrual; other money

market instruments shall be valued at the yield at which

they are currently traded. For this purpose, non-traded

instruments that is instruments not traded for a period of

seven days will be valued at cost plus interest accrued

till the beginning of the day plus the difference between

the redemption value and the cost spread uniformly over

the remaining maturity period of the instruments;

(c) government securities will be valued at yield to maturity

based on the prevailing market rate.

(d) In respect of convertible debentures and bonds, the

non-convertible and convertible components shall be

valued separately. The non-convertible component

should be valued on the same basis as would be

applicable to a debt instrument. The convertible

component should be valued on the same basis as

would be applicable to an equity instrument. If, after

conversion the resultant equity instrument would be

traded pari passu with an existing instrument which is

traded, the value of the latter instrument can be

adopted after an appropriate discount for the non-

tradability of the instrument during the period

preceding the conversion. While valuing such

instruments, the fact whether the conversion is optional

should also be factored in;

e) In respect of warrants to subscribe for shares attached

to instruments, the warrants can be valued at the value

of the share which would be obtained on exercise of

the warrant as reduced by the amount which would be

payable on exercise of the warrant. A discount similar

to the discount to be determined in respect of

convertible debentures (as referred to in sub-paragraph

(d) above) must be deducted to account for the period

which must elapse before the warrant can be

exercised;

(f) Where instruments have been bought on `repo' basis,

the instrument must be valued at the resale price after

deduction of applicable interest upto date of resale.

Where an instrument has been sold on a `repo' basis,

adjustment must be made for the difference between

the repurchase price (after deduction of applicable

interest upto date of repurchase) and the value of the

instrument. If the repurchase price exceeds the value,

the depreciation must be provided for and if the

repurchase price is lower than the value, credit must be

taken for the appreciation.

V. TAX & LEGAL & GENERAL INFORMATION

FOR UNIT HOLDERS:

1. Tax on income in respect of units

As per the provisions of Section 10(35) of the Act, income

received in respect of units of a mutual fund specified

under Section 10(23D) of the Act is exempt from income

tax in the hands of the recipient unit holders.

2. Capital Gains & TDS

As per section 2(42A) of the Act, units of the scheme

held as a capital asset, for a period of more than 12

months immediately preceding the date of transfer, will

be treated as long-term capital assets for the

computation of capital gains; in all other cases, they

would be treated as short-term capital assets.

Tax & TDS Rates under the Act for Capital Gains

Tax Rates* under the Act TDS Rate* @ Under the Act NRIs/PIOs/Other Non FII FIIs

NRIs/PIOs Residents FIIs Residents Non-Residents

Short Term Units of a non equity Taxable at normal rates 30% Nil 30% for non resident non corporates, NilCapital Gain oriented fund applicable to the assessee (u/s 115AD) 40% for non resident corporates (u/s 195)

Units of an equity 15% on redemption of Nil 15% for all non-resients. (u/s 195)oriented fund units where STT is payable

on redemption (u/s 111A)

Long Term Units of a non equity 10% without indexation or 10% with no Nil 20% (with indexation) for non Capital Gain oriented fund 20% with indexation indexation residents (u/s 195)

whichever is lower benefit (u/s 112) (u/s 115AD)

Units of an equity Exemption in case of Nil Nil Niloriented fund redemption of units where

STT is payable on redemption [u/s 10(38)]

* Plus surcharge and education cess as per the Income Tax Act.


In the case of non-resident investors, the above rates would be

subject to applicable treaty relief. As per circular no.728 dated

October 1995 by CBDT, in the case of a remittance to a

country with which a Double Taxation Avoidance Agreement

(DTAA) is in force, the tax should be deducted at the rate

provided in the Finance Act of the relevant year or at the rate

provided in DTAA whichever is more beneficial to the assessee.

Securities Transaction Tax (STT)

From 01.04.2007 the seller of equity oriented mutual fund

units has to pay a STT of 0.25% of the redemption value of

the investment. However no deduction would be allowed to

any unit holder for STT paid while computing Capital Gains.

The purchaser and seller of units of an equity oriented mutual

fund units are liable to pay STT @ 0.125% each where the

purchase and sale is entered into on a recognized stock

exchange and the contract for the purchase and sale of such

units is settled by actual delivery or transfer of such units.

Further, the seller of units is also liable to pay STT @ 0.025 %

in case of sale of units of an equity oriented fund where the

transaction of such sale is entered into on a recognized

stock exchange and the contract for the sale of such units is

settled otherwise than by the actual delivery or transfer of

such units.

The units of mutual funds other than equity-oriented funds

will be exempt from STT.

Note: ‘Equity oriented fund’ is defined as (u/s 115T):

• a mutual fund where the assets are invested in the

equity shares of domestic companies to the extent of

more than sixty five per cent of the total proceeds of

such fund; and

• which has been set up under a scheme of a Mutual

Fund specified in section 10(23D) of the Act.

The percentage of equity holding of such fund would be

calculated as the annual average of the monthly averages of

the opening and closing figures.

3. Capital Losses

Losses under the head ‘Capital Gains’ cannot be set-off

against income under any other head.

The short term capital losses resulting from the sale of

units would be available for setting off against capital

gains which would reduce the tax liability of the unit

holder to that extent.

Further unabsorbed short term capital losses shall be

carried forward and set off against the income under

the head ‘Capital Gain’ in any of the subsequent eight

assessment years.

Unabsorbed long-term capital loss can be carried

forward and set off against the long-term capital gains

arising in subsequent 8 assessment years.

Further, within the head ‘Capital Gains’, long-term

capital losses cannot be adjusted against short-term

capital gains.

4. Dividend Stripping

All Unit Holders:

As per Section 94(7) of the Act, loss arising on sale of

Units, which are bought within 3 months prior to the

record date (i.e. the date fixed by the Mutual Fund for

the purposes of entitlement of the Units Holders to

receive the income) and sold within 9 months after the

record date, shall be ignored for the purpose of

computing income chargeable to tax to the extent of

exempt income received or receivable on such Units.

5. Bonus Stripping

All Unit Holders:

As per Section 94 (8) of the Act, wherein in case of

Units purchase within a period of 3 months prior to the

record date for entitlement of bonus and sold within 9

months after the record date, the loss arising on

transfer of original Units shall be ignored for the

purpose of computing the income chargeable to tax.

The amount of loss so ignored shall be deemed to be

the cost of acquisition/purchase of such bonus Units as

are held by it/him on the date of such sale/transfer.

6. Rebate under section 88E of the Income Tax Act,

1961

Rebate under section 88E can be claimed by unit

holder for STT paid from the tax payable by him when:

a. Units are held as stock in trade.

b. Profits arising from sale of such units are offered for tax

under the head ‘Profits and Gains of Business or

Profession’

7. Investments by charitable and religious trusts

Units of a Mutual Fund Scheme referred to in clause

23D of section 10 of the Income Tax Act, 1961,

constitute an eligible avenue for investment by

charitable or religious trusts per rule 17C of the Income

Tax Rules, 1961, read with clause (xii) of sub-section (5)

of section 11 of the Income Tax Act, 1961.

8. Wealth Tax

Units held under the Mutual Fund Scheme are not

treated as assets within the meaning of section 2(ea) of

the Wealth Tax Act, 1957 and are, therefore, not liable

to Wealth-Tax.


9. Gift Tax

The Gift Tax Act, 1958 has ceased to apply to gifts

made on or after October 1, 1998. Gifts of Units

purchased under plan, would therefore, be exempt

from gift tax. Where however the gift, exceeding Rs.

50,000/- is made on or after 01.04.06, then the same is

to be included as income in the hands of donee under

new sub clause (xiii) inserted in Section 2(24) read with

the new Section 56(2)(vi).

FOR THE FUND:

1. Registered with SEBI

Baroda Pioneer Mutual Fund is registered with SEBI

and is as such eligible for benefits under section

10(23D) of the Act. Accordingly, its entire income is

exempt from tax.

2. Dividend Distribution Tax

No dividend distribution tax is required to be paid on

distribution of dividend on equity-oriented funds.

Sec.115-R- Dividend Distribution Tax

In case of money market / liquid funds

25% on the Dividend declared + applicable surcharge

+ education cess.

In case of other funds

For Individuals & HUFs-12.5% on the dividend

declared + applicable surcharge + education cess.

For other than Individuals & HUFs-20% on the Dividend

declared + applicable surcharge + education cess.

Any Dividend receivable in the hands of investors is

exempt from Tax u/s/10(35) of Income Tax Act, 1961.

3. No TDS on receipt of income

The Fund will receive all its income without deduction

of tax as per provisions of section 196(iv) of the Income

Tax Act, 1961.

4. Service Tax

AMC/Mutual Funds are covered under the category of

“Business Auxiliary Services” and are liable for paying

service tax as service recipients on services provided

by distributors of mutual fund/ agents. The rate of

service tax is 10.30% (inclusive of education cess of

3%) with effect from 24.02.2009.

B. Legal Information

Nomination Facility

Nomination facility is available only for individuals

applying on their own behalf. Nomination can also be in

favour of the Central Government, State Government, a

local authority, any person designated by virtue of his

office or a religious or charitable trust. As per AMFI

letter 35/MEM-COR/57/07-08 dated January 03, 2008,

applicants can make multiple nominations to the

maximum of three. This facility is also available to NRI

investors. Only resident Indian individuals maybe

nominated. This will however be subject to change, if

any, in the guidelines of RBI/ other regulators.

Applicants may change their nomination at any time

during the currency of the scheme.

In case of multiple nominations, applicants must clearly

specify the percentage of units in favour of each

nominee. In case the applicants do not specify the

percentage of units for each nominee, units will be

distributed equally among all the nominees. Please note

that such allocation/share should be in whole numbers

without any decimals making a total of 100 percent.

A minor can be nominated and in that event, the name

and address of the Guardian of the minor Nominee

shall be provided by the Unit holder.

The Nominee shall not be a society, trust, body

corporate, partnership firm, Karta of Hindu Undivided

Family, holder of Power of Attorney. A non-resident

Indian can be a nominee subject to the exchange

controls in force from time to time.

Nomination in respect of the Units stands rescinded

upon the transmission of Units.

Transmission of Units in favour of a Nominee shall be a

valid discharge by the Mutual Fund/ AMC/ Trustees

against the legal heirs of the Unit holder(s).

The cancellation of nomination can be made only by

those individuals who hold Units on their behalf singly

or jointly and who made the original nomination.

On cancellation of the nomination, the nomination shall

stand rescinded and the Mutual Fund/ AMC/ trustees

shall not be under any obligation to transmit the Units

in favour of the Nominee.

Requirements of Prevention of Money Laundering

In terms of the Prevention of Money Laundering Act,

2002, the Rules issued thereunder and the guidelines/

circulars issued by the Securities and Exchange Board

of India (‘SEBI’) and Association of Mutual Funds in

India (‘AMFI’) regarding Anti Money Laundering (‘AML

Laws’), all intermediaries, including Mutual Funds, have

to verify and maintain records of all its investors

through the mandated Know Your Customer (‘KYC’)

process with effect from February 01, 2008.

Effective February 01, 2008 for any investment in


mutual funds (Fresh Purchases/ Additional Purchases

and new SIP registrations) of Rs. 50,000/- or more,

KYC must be completed for all unitholders/investor in a

folio (including guardian where the investor is a minor,

NRIs, Power of Attorney holders) irrespective of the

mode of holding. Investments where KYC is not

completed, is liable to be rejected.

KYC Requirements

CDSL Ventures Ltd ("CVL") has been appointed by

mutual funds to complete KYC formalities on their

behalf and hence investors need to submit their details

only once for completion of KYC formalities across

these mutual funds.

Investors will need to submit a completed KYC

application form affixing a copy of their recent

passport-size photograph along with copy of PAN card

and proof of address for Individuals, or Corporate

Documents for bodies corporate, at any designated

'Point of Service' (POS) centre of CDSL Ventures Ltd

("CVL"). Applications may also be submitted at select

branches of AMC. Prescribed list of documents, List of

POS, Individual KYC form, Non-Individual KYC form

are available on the websites of the AMC and

Association of Mutual Funds in India.

All documents must be submitted in original along with

a self-attested copy. The original will be returned

across the counter after verification. Alternatively,

investors may submit copies duly attested by a

manager of a scheduled commercial bank (the

designation seal should be affixed), notary public or

gazetted officer.

On submission of the KYC application form and

documents to CVL, investors will receive an

acknowledgement across the counter, a copy of which

must be submitted to us as proof of having completed

KYC formalities.

The investor(s) and their attorney, if any, shall produce

reliable, independent source documents such as

photographs, certified copies of ration card/ passport/

driving license/ PAN card, etc. and/or such documents

or produce such information as may be required from

time to time for verification of the identity, residential

address and financial information of the investor(s) by

the AMC/Mutual Fund. If the investor(s) or the person

making payment on behalf of the investor(s), refuses/

fails to provide the required documents/ information

within the period specified in the communication(s) sent

by the AMC to the investor(s) then the AMC, after

applying appropriate due diligence measures, believes

that the transaction is suspicious in nature within the

purview of the Act and SEBI circulars issued from time

to time and/or on account of deficiencies in the

documentation, shall have absolute discretion to report

suspicious transactions to FIU-IND and/ or to freeze the

folios of the investor(s), reject any application(s)/

allotment of units and effect mandatory redemption of

unit holdings of the investor(s) at the applicable NAV

subject to payment of exit load, if any, in terms of the

said communication sent by the AMC to the investor(s)

in this regard. The KYC documentation shall also be

mandatorily complied with by the holders by virtue of

operation of law e.g. transmission, etc. The Baroda

Pioneer Mutual Fund, Baroda Pioneer Asset

Management Company Limited, The Trustees of

Baroda Pioneer Mutual Fund and their Directors,

employees and agents shall not be liable in any manner

for any claims arising whatsoever on account of

freezing the folios/ rejection of any application/

allotment of units or mandatory redemption of units due

to non-compliance with the provisions of the Act, SEBI

circular(s) and KYC policy and/ or where the AMC

believes that transaction is suspicious in nature within

the purview of the Act and SEBI circular(s) and

reporting the same to FIU-IND.

Transfer and transmission of units

The Units of the Scheme are not transferable. In view of

the same, additions/ deletion of names will not be

allowed under any folio of the Scheme

In case Units are held in a single name by the Unit

Holder, Units shall be transmitted in favour of the

nominee(s), where the Unit Holder has appointed

nominee(s) upon production of death certificate or any

other document to the satisfaction of the Fund,

AMC/Trustee or Registrar. If the Unit Holder has not

appointed nominee(s), the Units shall be transmitted in

favour of the Unit Holder’ s executor/ administrator of

estate/Legal heir(s) as the case may be on production

of Death Certificate or any other document to the

satisfaction of the Fund, AMC/ Trustee or Registrar. In

case Units are held by more than one registered Unit

Holder, then upon death of the first Unit Holder, Units

shall be transmitted in favour of the second named

Holder on production of a Death Certificate or any other

document to the satisfaction of the Fund/ AMC/

Trustee or Registrar. The rights in the Units will vest in

the nominee(s) concerned upon the death of all Joint

Unit Holders upon the nominee producing a Death


Certificate or any other document to the satisfaction of

the Fund, AMC/ Trustee or Registrar.

Suspension of Sale and Redemption of Units

The Trustee and the Board of Directors of the AMC

may decide to temporarily suspend determination of

NAV of the Scheme offered under this Document, and

consequently sale and redemption of Units, in any of

the following events:

1. When one or more stock exchanges or markets, which

provide basis for valuation for a substantial portion of

the assets of the Scheme are closed otherwise than for

ordinary holidays.

2. When, as a result of political, economic or monetary

events or any circumstances outside the control of the

Trustee and the AMC, the disposal of the assets of the

Scheme is not reasonable, or would not reasonably be

practicable without being detrimental to the interests of

the Unitholders.

3. In the event of breakdown in the means of

communication used for the valuation of investments of

the Scheme, without which the value of the securities

of the Scheme cannot be accurately calculated.

4. During periods of extreme volatility of markets, which in

the opinion of the AMC are prejudicial to the interests

of the Unitholders of the Scheme.

5. In case of natural calamities, strikes, riots and bandhs.

6. In the event of any force, majeure or disaster that affects

the normal functioning of the AMC or the Registrar.

7. If so directed by SEBI.

In the above eventualities, the time limits indicated

above, for processing of requests for purchase and

redemption of Units will not be applicable.

Suspension or restriction of repurchase/ redemption

facility under any scheme of the mutual fund shall be

made applicable only after obtaining the approval from

the Boards of Directors of the AMC and the Trustees.

After obtaining the approval from the AMC Board and the

Trustees, an intimation would be sent to SEBI in advance

providing details of circumstances and justification for

the proposed action shall also be informed.

Unclaimed redemption amount

The unclaimed Redemption amount may be deployed

by the Mutual Fund in call money market or money

market instruments only and the investors who claim

these amounts during a period of three years from the

due date shall be paid at the prevailing Net Asset

Value. After a period of three years, this amount will be

transferred to a pool account and the investors can

claim the amount at NAV prevailing at the end of the

third year. The income earned on such funds will be

used for the purpose of investor education. The AMC

will make a continuous efforts to remind the investors

through letters to take their unclaimed amounts.

Further, the investment management fee charged by

the AMC for managing unclaimed amounts shall not

exceed 50 basis points.

Unclaimed Dividend/ Redemptions in respect of the

open ended funds normally represent the time lag

between funding of the respective accounts (with bank)

by the AMC and the time taken for presentation of

redemption/dividend warrants by the investors. No

significant delay in the process is noticed.

Duration of the Scheme/ Winding up

The duration of the Open ended Scheme is perpetual.

In the case of Close ended Scheme, duration is limited

and specified in the SID of the respective scheme.

Winding up of the scheme:

A Scheme may be wound up, after repaying the

amount due to the Unitholders,-

1. On happening of any event, which in the opinion of the

Trustee, requires the Scheme to be wound up, OR

2. If seventy five percent (75%) of the Unitholders of the

Schemes pass a resolution that the Scheme be wound

up, OR

3. If SEBI so directs in the interest of the Unitholders or

4. In case of non-fulfillment of condition prescribed in

terms of minimum number of investors vide SEBI

circular No. SEBI/IMD/CIR No.10/22701/03 dated

December 12, 2003.

Where the Scheme is so wound up, the Trustee shall

give notice of the circumstances leading to the winding

up of the Scheme to:

(I) SEBI and,

(II) In two daily newspapers with circulation all over

India and in one vernacular newspaper circulating

at the place where the mutual fund is formed.

Effect of winding up:

On and from the date of the publication of notice under

clause (b) of sub-regulation (3) of regulation 39, the

trustee or the asset management Company as the case

may be, shall-

a) Cease to carry on any business activities in respect of

the Scheme so wound up;


b) Cease to create or cancel Units in the Scheme;

c) Cease to issue or redeem Units in the Scheme.

Procedure and manner of Winding Up:

a) The Trustee shall call a meeting of the Unitholders to

consider and pass necessary resolutions by simple

majority of the Unitholders present and voting at the

meeting for authorizing the Trustee or any other person

to take steps for winding up the Scheme concerned.

Provided that a meeting of the unit holders shall not be

necessary if the scheme is wound up at the end of

maturity period of the scheme.

b) The Trustee or the person authorized as above, shall

dispose off the assets of the Scheme concerned in the

best interest of the Unitholders of that Scheme.

c) The proceeds of the sale made in pursuance of the

above, shall, in the first instance, be utilized towards

discharge of such liabilities as are properly due under

the Scheme and after making appropriate provision for

meeting the expenses connected with such winding up,

the balance shall be paid to the Unitholders in

proportion to their respective interests in the assets of

the Scheme as on the date when the decision for the

winding up was taken.

d) On completion of the winding up, the Trustee shall

forward to the Board and the Unitholders, a report on

the winding up containing particulars such as

circumstances leading to the winding up, steps taken

for the disposal of the assets of the Fund before

winding up, expenses of the Fund for winding up, net

assets available for distribution to the Unitholders and a

certificate from the Auditors of the Scheme concerned.

e) Notwithstanding anything contained herein, the

provisions of the Regulations in respect of the

disclosure of half-yearly reports and annual reports

shall continue to apply. After the receipt of the report

referred to above under 'Procedure and Manner of

Winding Up', if SEBI is satisfied that all measures for

winding up of the Scheme concerned have been

completed, the Scheme shall cease to exist.

C. General Information

In addition to the following, this section may include

information on Underwriting, Securities Lending and

Borrowing by the Mutual Funds etc.:

STOCK LENDING BY THE MUTUAL FUND

If permitted by SEBI under extant regulations/

guidelines, the scheme may also engage in stock

lending. Stock lending means the lending of stock to

another person or entity for a fixed period of time, at a

negotiated compensation. The securities lent will be

returned by the borrower on expiry of the stipulated

period.

The Fund may in future carry out stock-lending activity

under any of its schemes, in order to augment its

income. Stock lending may involve risk of default on

part of the borrower. However, this risk will be

substantially reduced as the Fund has opted for the

"Principal Lender Scheme of Stock Lending", where

entire risk of borrower's default rests with approved

intermediary and not with the Fund. There may also be

risks associated with Stock Lending such as liquidity

and other market risks. Any stock lending done by the

scheme shall be in accordance with any Regulations or

guidelines regarding the same. The AMC will apply the

following limits, should it desire to engage in Stock

Lending:

a. Not more than 20% of the net assets can generally be

deployed in Stock Lending

b. Not more than 5% of the net assets can generally be

deployed in Stock Lending to any single counter party.

As on date, Baroda Pioneer Mutual Fund has not

engaged in any stock lending.

Borrowing by Mutual Fund

Under Regulation 44(2) of SEBI (MF) Regulations, 1996,

the Fund is allowed to borrow to meet its temporary

liquidity need of the Scheme for the purpose of

repurchase, redemption of Units or payment of interest

or dividend to the Unit holders. Further, as per the

Regulation, the Fund shall not borrow more than 20% of

the Net Assets of the Scheme and the duration of such

borrowing shall not exceed a period of six months.

The scheme wise borrowings by the Mutual Fund as on

March 31, 2009 is nil.

If the scheme decides to borrow, it may borrow either

from Banks of Baroda and/ or any other bank(s) or from

any other sources as may be decided by the AMC. The

loans may be without collateral or may consider using a

part of the scheme’s assets as collateral with the prior

approval of the Board of Directors of the AMC and the

Board of Trustees of the scheme.

INTER-SCHEME TRANSFER OF INVESTMENTS:

Transfers of investments from one scheme to another

scheme in the same mutual fund shall be allowed only if-

(a) Such transfers are done at the prevailing market price

for quoted instruments on spot basis.

Explanation: “spot basis” shall have same meaning as

specified by stock exchange for spot transactions.


(b) The securities so transferred shall be in conformity with

the investment objective of the scheme to Which such

transfer has been made.

ASSOCIATE TRANSACTIONS

Who is an Associate ?

For the purpose of this section, an associate or group

company shall include Bank of Baroda and its

subsidiaries, Joint Ventures and the Pioneer Global

Asset Management SpA and its subsidiaries.

Investments in Associate or Group Companies of the

Sponsor

Apart from applicable SEBI regulations from time to

time, there is no separate policy regarding investments

in associate or group companies of the sponsor.

Therefore, as per SEBI Regulations, the scheme will not

invest more than 25% of net assets of the scheme in

the securities of the Bank of Baroda Group companies.

Further, the aggregate investment made by all the

Baroda Pioneer Mutual Fund schemes in the securities

of Bank of Baroda Group companies will not exceed

25% of the net assets of the fund as a whole. No

investment shall be made in any unlisted security of an

associate or Group Company of the Sponsor, any

security issued by way of private placement by an

associate or group company of the Sponsor.

Details of investment made by the schemes in

securities of sponsors and its associates during the

previous three years is NIL.

Underwriting Obligations of Baroda Pioneer Mutual

Fund

As on date Baroda Pioneer Mutual Fund has no

underwriting obligation.

Subscription in Issues Lead Managed by Associates

of Sponsor

As on date NIL subscription in Issues Lead Managed by

Associates of Sponsor of Baroda Pioneer Mutual Fund

Associate Brokers

As on date there is nil transaction with associate

broker.

Agent Commission

For applications directly solicited and collected by the

branches of Bank of Baroda or by any associates, they

may also be paid an agent commission at a rate not

exceeding the rate of commission being paid to other

agents for the scheme.

Other Associate Transactions - NIL

Jurisdiction

The jurisdiction for any matters or disputes arising out

of the scheme shall reside with the Courts in India.

Documents Available for Inspection

The following documents will be available for inspection

at the office of the Mutual Fund at 501, Titanium, 501,

Western Express Highway, Goregaon (E) Mumbai-

400063 during business hours on any day (excluding

Saturdays, Sundays and public holidays):

• Memorandum and Articles of Association of the AMC• Investment Management Agreement• Trust Deed and amendments thereto, if any• Mutual Fund Registration Certificate• Agreement between the Mutual Fund and the Custodian• Agreement with Registrar and Share Transfer Agents• Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996 and amendments from time to timethereto.

• Indian Trusts Act, 1882.

INVESTOR GRIEVANCES REDRESSAL MECHANISM.

Investor grievances are normally received at AMC office or at the Customer Service Centres or directly by the Registrar. All grievances are forwarded to the Registrar for their necessary action. The complaints are closely followed up with the Registrar to ensure timely redresses and prompt investor service. Given below is the complaint history for the last three fiscal years:

Name of Schemes 01-04.2005- 01.04.2006- 01.04.07- 01.04.08- Received Redressed Received Redressed Received Redressed Received Redressed

Baroda Pioneer Diversified Fund 279 279 155 155 40 40 70 70(Formerly known as BOB ELSS’95)

Baroda Pioneer ELSS ‘96 Fund 74 74 73 73 60 60 51 51

Baroda Pioneer Income Fund Nil Nil 1 1 - - - -

Baroda Pioneer Gilt Fund Nil Nil 1 1 - - - -

Baroda Pioneer Liquid Fund Nil Nil 1 1 - - - -

Baroda Pioneer Balance Fund Nil Nil 2 2 - - - -

Baroda Pioneer Growth Fund 2 2 90 90 14 14 18 18

Baroda Pioneer MIP Fund 1 1 Nil Nil - - - -

Baroda Pioneer Children Fund Nil Nil Nil Nil - - - -

Baroda Pioneer Global Fund - - Nil Nil 3 3 1 1

31.03.2006 31.03.2007 31.03.2008 31.03.2009


Baroda Pioneer Asset Management Company Limited

501 Titanium, 5th Floor, Western Express Highway,

Goregaon (E), Mumbai - 400063, India.

Phone: +91 22 3074 1000 / 4219 7999.

Fax: +91 22 3074 1001.